Rationalising diesel prices. *Update: Now Deregulated*

This is a discussion on Rationalising diesel prices. *Update: Now Deregulated* within The Indian Car Scene, part of the BHP India category; What I read recently in newspaper was -
If the dollar's rate or crude prices fall, government will lower petrol's ...

If the dollar's rate or crude prices fall, government will lower petrol's price, but not that of diesel (to reach the price they are targeting) so that in future if dollar or crude prices fall or shoot up, prices of both, diesel as well as petrol will go up or down as per what would be needed.

IMO, instead of jacking up prices (further) government should lower the tax a bit so that they reach the point where prices can be lowered or raised as per international market.

Why can't the government bring diesel prices on par or closer to petrol price so everyone would stop yelling at the rich guys with luxury diesel cars and then provide a tax rebate at the end of the year or every quarter for all the transport agencies who take care of the logistics?

Common man doesn't get affected as the price of goods won't go up (not by much at least) Rich man gets to drive his luxury diesel without getting harassed and spoken ill about and car manufacturers can FINALLY look at decent numbers when it comes to petrol car sales!

Please read the article carefully. He was hoping that at the current rate of price increase, if rupee appreciates and prices fall, diesel will be deregulated in six months.

Yes, the title of the article posted is misleading: "Government to deregulate diesel prices in 6 months" conveys that diesel will be deregulated in 6 months irrespective of exchange rates and international fuel prices. Perhaps a better title would be "Government hopes for deregulation of diesel prices in 6 months due to expected Rupee value, international fuel prices, and 50p increase", but that would not make you want to click on it, would it? That's journalism.

What do you guys think? They may be mulling decontrol to a certain extent. The oil companies may be given the freedom to increase the prices to a certain upper limit as fixed by the cabinet.

I remember the Modi govt also thinking about trying to work on a system where pricing of diesel to consumers is decontrolled whereas farmers can be provided diesel with a subsidy, although that'll be harder to implement.

I remember the Modi govt also thinking about trying to work on a system where pricing of diesel to consumers is decontrolled whereas farmers can be provided diesel with a subsidy, although that'll be harder to implement.

Well, for the longer term what needs to be watched is whether Modi &co kill off AADHAR and the Direct Benefit Transfer (to adhaar-linked bank accounts) of fuel and other subsidies so that they may be targetted, otherwise the whole fuel and electricity pricing mess will prolong/return.

Well, for the longer term what needs to be watched is whether Modi &co kill off AADHAR and the Direct Benefit Transfer (to adhaar-linked bank accounts) of fuel and other subsidies so that they may be targetted, otherwise the whole fuel and electricity pricing mess will prolong/return.

The government has essentially stopped the transfer of DBT-L (LPG subsidy through DBT) citing reasons of impropoer infrastructre and too many loop holes in the process. There are however other subsdies that are still being routed through DBT, viz. pensions, educational benifits and more, although the volumes have dropped.

Well, for the longer term what needs to be watched is whether Modi &co kill off AADHAR and the Direct Benefit Transfer (to adhaar-linked bank accounts) of fuel and other subsidies so that they may be targetted, otherwise the whole fuel and electricity pricing mess will prolong/return.

Using Aadhaar for targeted benefits is the best / only way forward. Question is if vested interests, hoarders & those who prefer lack of a strong system influence Modi to ditch this project of UPA?

AADHAR is here to stay. Direct benefit transfer is the way to go as it reduces wastage and allows the govt to measure where the money goes.

In fact all the pet schemes of the UPA like NREGA, RTE and RTF are going to stay. Talks of scrapping them were just pre-election rhetoric. Everybody does.

But the way Aadhar was being used to deliver LPG subsidies was highly idiotic.
Case A
1. You have to register your Aadhar card with the LPG agency.
2. You also have to connect your aadhar card with the bank account.
3. While buying the LPG cylinder, make full payement
4. Get subsidy balance in your account (as a kind of reimbursement)

Compare to this Case B:
1. You have to register your Aadhar card with the LPG agency.
2. While buying the LPG cylinder make subsidized payment because the LPG agency has your details
3. In case you don't have Aadhar card registered with the LPG agency, you get invoiced with full LPG rate.

I don't understand why Govt wanted to go ahead with the Case A scenario when it only meant more transactions for ultimately the same end result.

But the way Aadhar was being used to deliver LPG subsidies was highly idiotic.
Case A
1. You have to register your Aadhar card with the LPG agency.
2. You also have to connect your aadhar card with the bank account.
3. While buying the LPG cylinder, make full payement
4. Get subsidy balance in your account (as a kind of reimbursement)

Compare to this Case B:
1. You have to register your Aadhar card with the LPG agency.
2. While buying the LPG cylinder make subsidized payment because the LPG agency has your details
3. In case you don't have Aadhar card registered with the LPG agency, you get invoiced with full LPG rate.

I don't understand why Govt wanted to go ahead with the Case A scenario when it only meant more transactions for ultimately the same end result.

There could be some misuse in case B. Suppose someone doesn't use his full quota of cylinders in a year - maybe only 9. His remaining stock of 3 is then sold in black. On paper, he uses all 12 and govt pays for all 12.

Compare this to the first case, everybody pays the market rate and then gets reimbursed directly from the govt. So if someone uses 9 cylinders, govt will pay for 9 cylinders only.

At least this is what strikes me right now, could be some other reason as well.

There could be some misuse in case B. Suppose someone doesn't use his full quota of cylinders in a year - maybe only 9. His remaining stock of 3 is then sold in black. On paper, he uses all 12 and govt pays for all 12.

Compare this to the first case, everybody pays the market rate and then gets reimbursed directly from the govt. So if someone uses 9 cylinders, govt will pay for 9 cylinders only.

At least this is what strikes me right now, could be some other reason as well.

So since the LPG agency is rogue and they can do this, the end user is made to suffer the idiosyncrasies of the payment-claim-reimbursement cycle?

If you meant that the end user himself turns rogue and sells the cylinder in black, well he can do that even in Case A.